[Congressional Record Volume 154, Number 74 (Tuesday, May 6, 2008)]
[House]
[Pages H3096-H3099]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          COIN MODERNIZATION AND TAXPAYER SAVINGS ACT OF 2008

  Mr. GUTIERREZ. Madam Speaker, I move to suspend the rules and pass 
the bill (H.R. 5512) to authorize the Secretary of the Treasury to 
prescribe the weights and the compositions of circulating coins, and 
for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5512

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Coin Modernization and 
     Taxpayer Savings Act of 2008''.

     SEC. 2. FINDINGS.

       The Congress finds as follows:
       (1) International demand along with market speculation for 
     commodity metals has, over the past several years, increased 
     the cost of producing circulating coins in the United States.
       (2) In a July 30, 2007, letter to the Congress, the 
     Secretary of the Treasury, with support of the 
     Administration's Office of Management and Budget, requested 
     that legislation be put forward to authorize the Secretary of 
     the Treasury to make changes to the composition of 
     circulating coins.
       (3) The United States Mint has studied alternative metals 
     for use in circulating coins, as noticed in its 2004 annual 
     report.
       (4) In 1943, the United States Mint produced zinc-coated 
     steel pennies in response to war-time demands for copper.
       (5) The United States Mint gained further experience 
     changing the metal content of pennies in 1982, when it began 
     producing copper-coated zinc pennies as a result of rising 
     copper prices.
       (6) The Royal Canadian Mint has produced for several years 
     a copper-coated steel 1-cent coin that is similar to the 
     United States penny at a significantly lower cost than the 
     cost to produce the United States penny.
       (7) Given the current cost to make a penny and volume of 
     pennies minted, by simply reducing penny production costs to 
     face value, the United States will save more than 
     $500,000,000 in the next 10 years alone.
       (8) Reducing the cost to produce a nickel to face value 
     will save the United States an additional $60,000,000 per 
     year.

[[Page H3097]]

       (9) Commodity metal prices are often cyclical in nature, 
     and can be inflated by speculation, so it is important that a 
     solid trend in the rising price of a commodity metal be 
     established before any change in the metal content of a coin 
     is made.

     SEC. 3. IMMEDIATE REDUCTION IN THE COST OF PRODUCING 1-CENT 
                   COINS THROUGH THE USE OF STEEL PENNIES.

       Subsection (c) of section 5112 of title 31, United States 
     Code, is amended to read as follows:
       ``(c) Composition of 1-Cent and 5-Cent Coins.--
       ``(1) 1-cent coin.--
       ``(A) In general.--Subject to paragraph (2), beginning 270 
     days after the date of the enactment of the Coin 
     Modernization and Taxpayer Savings Act of 2008, the 1-cent 
     coin shall--
       ``(i) be produced primarily of steel; and
       ``(ii) meet such other specifications as the Secretary may 
     determine to be appropriate, including any change in the 
     weight from that specified in subsection (a)(6).
       ``(B) Treatment.--The 1-cent coin shall be treated to 
     impart a copper color to the appearance of the coins so that 
     the appearance is similar to 1-cent coins produced of a 
     copper-zinc alloy.
       ``(C) Exception for lincoln bicentennial numismatic 
     pennies.--No provision of this paragraph shall apply with 
     respect to 1-cent coins described in section 304 of the 
     Presidential $1 Coin Act of 2005 that are issued for 
     numismatic purposes.
       ``(2) Alternative 1-cent coin composition.--
       ``(A) In general.--If, before the end of the 90-day period 
     beginning on the date of the enactment of the Coin 
     Modernization and Taxpayer Savings Act of 2008, the Secretary 
     determines that, with the addition of any other element to 
     any alloy of zinc and copper of which 1-cent coins could have 
     been composed as of the day before such date of enactment, 
     there is a way--
       ``(i) to produce 1-cent coins of the same diameter, general 
     composition, and general weight as 1-cent coins produced in 
     accordance with this subsection as of the day before such 
     date of enactment; and
       ``(ii) to achieve the goals of paragraph (1) by reducing 
     the unit cost to produce the 1-cent coin to less than 1 cent 
     while retaining such coin's ease of use and ensuring ease of 
     co-circulation with 1-cent coins of the diameter and weight 
     already circulating as of such date of enactment for ordinary 
     commerce,

     the Secretary may add any such element and continue 
     production of 1-cent coins of the same diameter, general 
     composition, and general weight as 1-cent coins produced in 
     accordance with this subsection as of the day before such 
     date of enactment instead of complying with paragraph (1).
       ``(B) Effective period.--This paragraph shall only apply if 
     the change to the new composition and the subsequent drop in 
     the production cost of the 1-cent coin referred to in 
     subparagraph (A) can be achieved before the end of the 270-
     day period referred to in paragraph (1).
       ``(C) Report to the congress.--Any determination and action 
     by the Secretary under subparagraph (A) shall be promptly 
     reported to the Congress.''.

     SEC. 4. AUTHORITY TO CHANGE METALLIC CONTENT OF 5-CENT COINS 
                   TO LESS COSTLY ALTERNATIVE.

       (a) In General.--Subsection (c) of section 5112 of title 
     31, United States Code, (as amended by section 3) is amended 
     by adding at the end the following new paragraph:
       ``(3) 5-cent coin.--
       ``(A) In general.--After the end of the 2-year period 
     beginning on the date of the enactment of the Coin 
     Modernization and Taxpayer Savings Act of 2008, the Secretary 
     shall produce no 5-cent coin that is not primarily made of 
     steel with a coating of nickel, that can co-circulate with 
     the existing supply of 5-cent coins and work interchangeably 
     in coin handling machines, except that--
       ``(i) the Secretary shall make no change to the content of 
     the existing 5-cent coin if at that point the unit cost of 
     production of such coins is lower than the face value of the 
     coin; and
       ``(ii) if the report issued by the Secretary pursuant to 
     section 6 indicates that a different metallic content of 
     circulating 5-cent coins is both functional and 
     interchangeable, and more economical to produce in both the 
     short and long term, the Secretary shall propose such content 
     to the Congress in the form of a legislative recommendation.
       ``(B) Factors to be considered.--In prescribing the weight 
     and the composition of the 5-cent coin, the Secretary shall 
     consider--
       ``(i) factors relevant to the potential impact of any 
     revisions to the weight and composition of the material on 
     the current coin suppliers;
       ``(ii) factors relevant to the acceptability of new coinage 
     materials, including the effect on vending machines and 
     commercial coin processing equipment and making certain, to 
     the greatest extent practicable, that any new coins work 
     without interruption in existing coin acceptance equipment 
     without modification; and
       ``(iii) such other factors that the Secretary, in 
     consultation with merchants who would be affected by any 
     change in the weight and composition of the 5-cent coin, 
     vending machine and other coin acceptor manufacturers, 
     vending machine owners and operators, transit officials, 
     municipal parking officials, depository institutions, coin 
     and currency handlers, armored-car operators, car wash 
     operators, and American-owned manufacturers of commercial 
     coin processing equipment, considers to be appropriate and in 
     the public interest, after notice and opportunity for 
     comment.
       ``(C) Comment and selection process.--In making any 
     determination with respect to any change in the weight and 
     composition of the 5-cent coin, the Secretary shall enter 
     into a formal rulemaking process that includes a hearing on a 
     record in addition to the publication of notice and 
     opportunity for comment.''.
       (b) Technical and Conforming Amendment.--Section 5112(a)(5) 
     of title 31, United States Code, is amended by striking ``and 
     weighs 5 grams''.

     SEC. 5. AUTHORITY TO CONDUCT RESEARCH AND DEVELOPMENT ON ALL 
                   CIRCULATING COINS.

       To accomplish the goals of this Act, the Secretary may 
     conduct any appropriate testing within or without the 
     Department of the Treasury, and may solicit input from or 
     otherwise work in conjunction with entities within or without 
     the Federal government including independent research 
     facilities or current or potential suppliers of the material 
     used in volume production of circulating coins, to complete 
     the report referred to in this Act and to develop, evaluate 
     or begin the use of new metallic material for such 
     production.

     SEC. 6. BIENNIAL REPORT TO CONGRESS ON CURRENT STATUS OF COIN 
                   PRODUCTION COSTS AND ANALYSIS OF ALTERNATIVE 
                   CONTENT REQUIRED.

       (a) Biennial Report Required.--Before the end of the 270-
     day period beginning on enactment of this Act, and at 2-year 
     intervals following the initial report, the Secretary of the 
     Treasury shall submit a report to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate analyzing 
     production costs for each circulating coin, cost trends, and 
     possible new metallic materials or technologies for the 
     production of circulating coins.
       (b) Detailed Recommendations.--The reports required under 
     this section shall contain detailed recommendations for any 
     appropriate changes to the metallic content of circulating 
     coins in such a form that the recommendations could be 
     enacted into law as appropriate.
       (c) Improved Production Efficiency.--The reports required 
     under this section shall include recommendations for changes 
     in the methods of producing coins at the United States Mint 
     that would further reduce the costs to produce circulating 
     coins, and include notes on any legislative changes that 
     might be necessary to achieve such goals.
       (d) Minimizing Conversion Costs.--The reports required 
     under this section shall--
       (1) include no recommendation for new specifications for 
     producing a circulating coin that would require significant 
     change to coin-accepting and coin-handling equipment to 
     accommodate changes to all circulating coins simultaneously, 
     except for any potential change to the 5-cent coin as 
     authorized under section 4; and
       (2) to the greatest extent possible, recommend 
     specifications that, while consistent with other portions of 
     this section and the amendments made by this Act, require no 
     changes to coin-accepting or coin-handling equipment 
     whatsoever to accommodate both coins produced with the new 
     specifications and coins produced as of July 31, 2007.
       (e) Fraud Prevention.--The reports required under this 
     section shall make no recommendation for a specification 
     change that would facilitate or allow the use of a coin with 
     a lesser value produced by another country, or the use of any 
     token or other easily or regularly produced metal device of 
     minimal value, in the place of a circulating coin produced by 
     the Secretary.

  The SPEAKER pro tempore (Ms. Jackson-Lee of Texas). Pursuant to the 
rule, the gentleman from Illinois (Mr. Gutierrez) and the gentleman 
from Illinois (Mr. Roskam) each will control 20 minutes.
  The Chair recognizes the gentleman from Illinois.


                             General Leave

  Mr. GUTIERREZ. Madam Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks on this legislation and insert extraneous material 
thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Illinois?
  There was no objection.
  Mr. GUTIERREZ. Madam Speaker, I yield myself 5 minutes.
  I rise today in strong support of H.R. 5512, the Coin Modernization 
and Taxpayer Savings Act of 2008, and I want to thank the gentleman 
from Ohio (Mr. Space) for all of his hard work and perseverance in 
getting this very important piece of legislation to the House floor.
  It's not every day that the House considers legislation that has the 
potential of saving U.S. taxpayers over

[[Page H3098]]

$100 million a year, but that is exactly what we're doing today with 
H.R. 5512, and Mr. Space should be proud of his efforts and 
accomplishments on this bill.
  Since March of 2003, increasing metal prices, caused by high world 
demand for core metals, have driven the costs of copper and nickel up 
by 300 percent, while zinc has increased 450 percent. As a result, the 
cost of producing our Nation's circulating coins have increased 
dramatically.
  In fiscal year 2007, it cost nearly 2 cents to make each penny and 10 
cents for each nickel, needlessly costing the American taxpayers over 
$100 million last year alone, but by simply bringing the cost of 
producing pennies and nickels down to their face value, H.R. 5512 will 
save the government nearly $1 billion over the next 10 years.
  In brief, H.R. 5512 requires the U.S. Mint to immediately take steps 
to lower the production costs of pennies, requires the Mint to research 
an alternative composition for the nickel in 2 years, and grants the 
Mint the authority to research lower cost alternative metal content for 
all U.S. coins.
  First, H.R. 5512 requires the Mint to begin production of a steel 
penny within 9 months of enactment. This should result in immediate and 
substantial savings to taxpayers. The bill also gives the Mint the 
flexibility to research other low-cost alternatives to a steel penny 
within the same 9-month period and report to Congress any alternative 
recommendation.
  Second, the bill requires the Mint to begin producing a nickel-coated 
steel nickel in 2 years, unless the Mint develops a less costly 
alternative and recommends such an alternative to Congress or the cost 
of producing the nickel in its current form is below the coin's face 
value.
  Finally, H.R. 5512 confirms that the Mint has the authority to 
conduct research and development into alternative composition that will 
lower production costs for all U.S. coins. This provision, along with 
the bill's requirement that the Mint issue a biennial report to 
Congress on the current status of coin production costs and an analysis 
of alternative content, will ensure that we avoid situations of 
negative seignorage for U.S. coins in the future.
  Bottom line, Madam Speaker, if we continue under the status quo, with 
each new penny and nickel we issue, we will be contributing to our 
national debt by almost as much as the coin is worth. These losses are 
mounting rapidly, and we need to act immediately to lower the costs of 
producing the penny and the nickel.
  H.R. 5512 will give the U.S. Mint the authority it needs to make the 
necessary changes to our coins without creating an undue burden on the 
relevant industries or causing a disruption in the minting process.
  For these reasons, I urge all Members to support its passage.
  I reserve the balance of my time.

                              {time}  1830

  Mr. ROSKAM. Madam Speaker, I yield myself such time as I may consume. 
I am pleased to rise in support of H.R. 5512, the Coin Modernization 
and Taxpayer Savings Act of 2008.
  First, I would like to thank Chairman Frank, Chairman Gutierrez and 
my colleague from Ohio (Mr. Space) for bringing this important bill to 
the floor. And I would also like to thank Ranking Member Bachus for his 
support of my own coin content bill, H.R. 4036, the Cents and 
Sensibility Act, which I introduced with Mr. Castle of Delaware.
  Madam Speaker, last year, I took my son to visit the Denver Mint in 
Colorado, and there we discovered during our tour that the cost of a 
penny was--actually what the gentleman from Illinois just referred to--
1.7 cents, the cost to the government to make each single penny. And 
that's obviously more than it's worth. At current production rates, the 
Federal Government spends more than $134 million to produce eight 
billion pennies annually at a loss of $54 million to the taxpayer. It 
makes no sense.
  Two years ago last Thursday, when I was not yet a Member of this 
body, the U.S. Mint sent to Congress a letter stating what my son and I 
discovered on our trip. And since then, a whole lot of nothing has 
happened. And I think, frankly, the Mint has been a little bit remiss 
in not bringing up a thoughtful suggestion on cost cutting. This bill 
will address the short-term problem of the costly penny and I believe 
the longer term issues of what circulating coins should be made of.
  I've got to say I'm flattered in a way in that there are elements of 
this bill that have taken some of the elements of the bill that I 
introduced. So when H.R. 5512 was introduced, this bill, in other 
words, it was done so with some of the provisions that I was pleased to 
offer. The most important point is to immediately change the 
composition of the penny from copper-coated zinc to copper-coated 
steel. This change would slash the cost to make the penny.
  For several years, Canada, our neighbors to the north, have been 
saving money producing its one cent coin, which is essentially 
identical to the U.S. penny, out of steel in this manner, originally in 
the same Tennessee plant in which our penny blanks are made. This 
provision blends an enormous cost-saving opportunity with ensuring that 
the content of the penny remains metal and securing American jobs that 
currently produce the penny.
  Two other provisions from my bill are included in H.R. 5512, that is, 
the provision giving the Mint explicit authority to do research and 
development with outside firms on potential coin content, an authority 
that the Mint says now is ambiguous, and this bill takes away that 
ambiguity. And secondly, requiring regular reports from the Mint to the 
Congress on production cost trends and strategies to reduce costs, 
Madam Speaker, either with different content or different production 
techniques, either one.
  These two provisions will ensure that the Mint is performing its due 
diligence in a timely manner and keeping the cost of production of all 
circulating coins down while maintaining communication with those who 
currently are involved in the industry on the production, supply and 
research sides.
  Madam Speaker, without wanting to be overly critical of the Mint, let 
me just point out that I think that they have not done exactly as I 
think would be wise as it relates to solving this cost production 
problem. It sent legislation here proposing to transfer power from 
Congress to the Mint on the authority to decide what coins should be 
made of, what they would weigh, authority explicitly held by Congress 
since the founding of this country.
  More recently, the Mint has criticized the bill before us because it 
would force the Mint to continue making coins out of metal. I don't 
know about your constituents, Madam Speaker, but I can guess, along 
with mine, that they're not interested in having coins made out of 
plastic, and even less enthusiastic if they found out that the decision 
to switch had been made by a few unelected bureaucrats in a gray 
building somewhere in Washington, DC. This is our responsibility to 
make these decisions. And worse, if such a switch were made the wrong 
way, it could force billions in conversion costs onto coin handlers, 
vending machines and banks, that would eventually be passed onto 
customers.
  As a Member representing the Land of Lincoln, Madam Speaker, I'm 
pleased that H.R. 5512 satisfies the need to reduce the cost to 
taxpayers, retains American jobs, all the while preserving the small 
one cent coin that has been the foundation of our economic system since 
its inception.
  I urge my colleagues to support the bill.
  Madam Speaker, I reserve the balance of my time.
  Mr. GUTIERREZ. I would like to yield as much time as he may consume 
to the author and chief proponent of the bill, Mr. Space from Ohio.
  Mr. SPACE. Madam Speaker, I'd like to thank the gentleman from 
Illinois, Subcommittee Chairman Gutierrez, for his cooperation and 
assistance in this legislation. I would also like to thank the ranking 
member, Mr. Paul from Texas, as well. And I would further like to 
extend my gratitude to Chairman Frank and Ranking Member Bachus for 
their work in advancing this important piece of legislation that will, 
in fact, eliminate wasteful governmental spending, saving the taxpayers 
a billion dollars over the next 10 years.
  Right now, our government is needlessly throwing away money in the 
production of coins. Estimates, as have been indicated, suggest that 
we're spending 1.7 cents or more per penny

[[Page H3099]]

produced in this country, as well as 9.5 cents per nickel.
  The content of a penny, as it exists now, is roughly 97\1/2\ percent 
zinc, with the balance copper. The content of a nickel is roughly 25 
percent nickel and 75 percent copper. And during the last 5 years, 
we've seen huge increases in the price of copper, nickel and zinc. As 
Subcommittee Chairman Gutierrez indicated, that is attributable to 
excess demand throughout the world on those metals, along with 
speculation in the market. This legislation is designed with an eye 
toward common sense to save, again, roughly $100 million per year over 
the next 10 years.
  Wasteful spending is especially egregious at a time when Americans 
are facing the pitfalls of an economic downturn. This legislation will 
begin the process of eliminating this wasteful spending by mandating 
changes in the content of the penny and the nickel and giving the 
Treasury a louder voice in the process.
  Based on production numbers, again I want to emphasize these changes 
will save taxpayers $1 billion over the next 10 years. The legislation 
will also help Congress be more responsive to market changes in the 
value of different metals over time, helping it to be more efficient 
and precise in its expenditures.
  The savings can be spent to put money into our schools, improve our 
infrastructure, increase access to health care, all the things that 
many Americans--certainly Americans I represent back in Ohio's 18th 
District--desperately need.
  As a Congress, we have a responsibility to use our funds in a 
responsible fashion. This legislation is a step toward more responsible 
spending and represents a bipartisan effort to work together on a 
measure that encompasses a high degree of common sense. Refreshing.
  Mr. GUTIERREZ. I congratulate the gentleman from Ohio on that 
wonderful speech.
  Mr. ROSKAM. Madam Speaker, I yield back the balance of my time.
  Mr. GUTIERREZ. I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Illinois (Mr. Gutierrez) that the House suspend the 
rules and pass the bill, H.R. 5512, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. CARTER. Madam Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of no quorum is considered withdrawn.

                          ____________________